Liam Fox: Britain does not have capacity to strike trade deals now

LONDON — Britain has turned down countries wishing to strike free-trade deals after Brexit because the government does not have the capacity to negotiate them, the U.K.’s International Trade Secretary Liam Fox said.

In an interview with POLITICO, Fox said he had told countries with pre-existing EU trade deals that the U.K. wanted to adopt these agreements in their entirety after Brexit but only on a temporary basis until they can be updated.

“There are a number of countries who said they would like to move directly to a new free-trade agreement but we have said we are simply unable to do that at the moment," Fox said. "It requires the willingness of the country involved to want to move the process further on and it’s dependent on our own capacity in our own department."

Fox said a trade deal with the U.S. was the government’s No. 1 priority after leaving the EU, followed by agreements with Australia and then New Zealand, but admitted it would have to wait until an agreement is struck with Brussels first.

Fox said that requests coming in to strike new deals with the U.K. is a sign of the global appetite for liberalizing trade with Britain.

Countries such as Japan, South Korea and Switzerland may hope to extract more concessions than they are able to from the EU.

However, it could also signify resistance from “third countries” outside the EU to allow the U.K. to simply roll over the same terms and conditions negotiated by the EU, a bloc with almost seven times the number of consumers. Countries such as Japan, South Korea and Switzerland — significant economies with existing trade deals with Brussels — may hope to extract more concessions from the U.K. than they are able to from the EU.

Fox, though, is adamant the future is positive for the U.K., even if new trading relationships take longer for his department to negotiate than first imagined.

“The EU has got some 40 free-trade agreements with third countries,” Fox said. “We have always said that our aim is twofold — first of all, to provide continuity as we leave the EU but then to move to more bespoke and more liberal agreements when we are able to do so."

Waiting for Brexit

Fox said the U.K. was “already moving” with the United States and was pushing Brussels to tie up its deal with Japan — agreed in principle in July — before Britain leaves in March 2019. “Australia and New Zealand [are] our next highest priorities because they are very keen to establish open markets and they are more like us in terms of the markets that they are,” Fox said. “Then we’ll have to look at the EU agreements and see how we can update them.”

The U.K. and the U.S. have set up a trade working group to lay the groundwork for an agreement which could be signed soon after Britain's exit in March 2019.

On the U.S. trade deal, Fox explained why it would have to wait: “We can’t make commitments until we see the shape of the EU deal because we don’t want to move faster in one agreement than another, or to make agreements which might tie our hands in another.”

Countries such as Japan also caution that it is impossible to determine what a deal with the U.K. would look like until the Brexit deal is done and Britain’s future access to the EU market is clear.

"Businesses will increasingly make their voices heard. We would all be wise to listen to those" — Liam Fox

Fox was adamant that an agreement with the European Union on the terms of the divorce and future relationship would be struck and would form the basis of Britain’s global trading system.

But he claimed there were politicians in Brussels who were prepared to scupper the prospects of a deal to protect the European project: “What they are thinking about is how can we increase political integration at whatever economic cost. For me it’s just unthinkable that you wouldn’t have as an essential pillar in your thinking, making your people more prosperous. It’s ever closer union.”

Fox warned that trade barriers with the U.K. would damage both sides and ultimately endanger the EU: “The success of the European project is ultimately whether it delivers prosperity for its people."

“You’ve got this tension between European businesses who want to get on and the political overlords who have this almost theological attachment to ever-closer union. Businesses will increasingly make their voices heard. We would all be wise to listen to those,” Fox said.

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tpk

@Steuersklave
There it is again! “The deal”. What is it? I don’t know. It’s blurry, it’s hiding in the dark but it must be magic as it is the solution to all our problems. But dark forces in the EU are trying to scupper it.
Somehow it must be more then just WTA+FTA, and somehow it must be less then EU membership. But let’s not talk about it too clearly, because then … it might vanish in thin air.
That’s what I mean by “there is no deal”. EU can not offer this kind of deal without either harming itself or UK having to accept to many of the bad stuff.

Posted on 9/4/17 | 9:31 PM CET

Chumley Warner

Germany desperately needs a trade deal with the UK because it their trade surplus is actually settled in cash. All eurozone trade surpluses with other euro members are settled as TARGET2 claims against the nation’s central banks…which let’s face it will NEVER be repaid.

No point stocking worthless IOUs when you have a cash customer.

Posted on 9/4/17 | 9:54 PM CET

Steuersklave

@ tpk

Haha, you got there before me. This story could just be a reflection of the fact that the UK still doesn’t have sufficient international trade negotiators (44 years of pooling these inside the EU customs union means that the UK is still inexperienced, and is even hiring trade negotiators from New Zealand in order to fill vacancies).

More generally, it is clear what the UK is after. It wants to apply all existing EU free trade deals after the UK leaves the EU customs union. This is obviously tricky for two major reasons. 1) In many or most cases, the UK share of EU import/export quotas agreed as part of the EU free trade deals will have to be agreed between the EU and UK and then presented to the other party. 2) Non-EU trade partners may wish to revisit their FTAs in the wake of 65 million consumers leaving the EU. In most cases they will seek to exert leverage over the smaller market (the UK), although in some cases they may seek to leverage the EU (Singapore, for example, is reviewing its free trade deal with the EU27, not with the UK).

Posted on 9/4/17 | 10:10 PM CET

Europeann

Britain in a headless mayhem! Even the stark-conservative Liam Fox recognizes that little England can´t get trade deals. Nothing new! As a defector of the EU, little England has forffeited all trade deals. Theresa May´s promises for trade with England´s ex-colonies are bogus. Little England is isolated from the EU, and from the rest of the world.

Posted on 9/4/17 | 10:19 PM CET

Ronald Grünebaum

Another glorious attempt to get what you already have. It’s quite pathetic.

Posted on 9/4/17 | 11:02 PM CET

george

Liar FOX forgot to say that those countries are: Iceland, Greenland and Papua New Guinee

Posted on 9/4/17 | 11:12 PM CET

Sub- Continent

@Steuersklave .. you have indeed cracked the code. The UK is going ahead and cherry-picking on matters of trade. The cherry-picking starts from a base of known EU trade-deals which are known and workable for the UK. Progressively the UK will adjust the “status-quo” and introduce adjustments depending on evolving relationships with non-EU nations and non-EU trading blocs. It is unlikely that the UK will be setting aside dosh to pay each non-EU country to achieve trade arrangements. Within this long term process, whether either party is screwed, remains to be seen. There is no need to wish the UK ill will, is there. The UK is after all, a third-country trading partner of the EU-bloc. In my experience, it is best to respect trading partners.

Posted on 9/4/17 | 11:18 PM CET

Sub- Continent

@ Ronald.. what is that the UK already has – in its existing relationship with the EU?

Posted on 9/4/17 | 11:23 PM CET

Wes

@Ronald Grünebaum
Stop being childish. It is nothing like we currently have whether you believe it will be better or worse, it certainly isn’t the same.

Posted on 9/4/17 | 11:37 PM CET

Europeann

The EU defector England has to do with its own failed economy. England´s problems have been made internally for decades since Thatcher, and have nothing to do with the EU. The elites in Britain have fared well, as they they have old wealth. But this is the opposite of democracy.

Posted on 9/4/17 | 11:47 PM CET

Lukas

@george

Actually he stated clearly which countries they are talking to. Learn to read.

Posted on 9/5/17 | 12:02 AM CET

Wilfried Spillemaeckers

Liam Fox – like I assume the majority of British politicians – has it so wrong. The success of the EU ultimately is NOT to make its people more prosperous, BUT the goal and success of the EU is PEACE in Europe. And out of peace prosperity for all will follow. 100 years ago a crisis like the Greek crisis might easily have led to war. It is astonishing that Great Britain whose people paid such a large toll in the two world wars of the 20th century has forgotten that. People like Fox and Johnson, May and Davis at some point in the future will be despised for leading their great union towards an abyss. I am reminded here of a poem quoted by Winston Churchill in his WW2 memoirs about the Chamberlain era : “Who is in charge of the clattering train …”

Posted on 9/5/17 | 12:11 AM CET

Hank

@Wilfried Spillemaeckers

Yes Wilfried politicians will always tell you what you want to hear. It’s for your own good don’t you know. You could all try just not having a war over every little thing. Just a thought.

Posted on 9/5/17 | 12:20 AM CET

Peter

Europeann
Can you read?? Clearly the education system in the EU needs attention! Re-read the article he said they are turn down bespoke FTA’s currently as they don’t have the capacity to negotiate multiple FTA’s simultaneously. It’s called boasting, now I have “Educated” you, you may return to sniffing glue and being racist or however ignorant scumbags like you tend to spend their free time!

Posted on 9/5/17 | 1:03 AM CET

Peter

Chumley warner
I know somebody with that nickname don’t suppose Aardvark breakfast means anything to you? Although if its not who I think it is you probably think I’m high as a kite lol

Posted on 9/5/17 | 2:25 AM CET

Jodocus5

Well, even the staunchest and most dogmatic Brexiteers who, incidentally, need Brexit to further their career, are able to recognise a concrete wall when they run into it head first. Well done! Nevermind that they could (and should) have recognised this a year ago.

The realisation that the UK, nimble as it might be, might be unable to secure better trade agreements than the EU comes late, but perhaps not too late.

Of course the UK would be well advised to stay within the framework of existing EU trade agreements and adapt them only as opportunities arise.

As to a free trade agreement with the US, of course the US is willing! It embarked on TTIP after all.

It’s just the niggling little treaty details that will have such huge consequences for everyday life that the US has some pretty well defined ideas about. Like criminisation of copyright infringement (the US sells lots of stuff that consists mostly of copyright), adoption of US product standards (all of its chlorinated poultry farming, hormonised beef, and roundup-ready hybrid seeds can drive through that tiny little detail of a loophole). And in its wake of course the US policy of only having reactive product health and safety rules (“Show us the bodies and we might think about product safety rules.”). Might also make it a tad difficult to keep sugar-laced soft drinks under control, but what’s an obesity epidemic between friends, eh?

In short: everything a majority of the EU people are against and the UK is simply in no position to refuse. Can you imagine that the US is so eager to do a free-trade deal with Britain?

What’s heartening is that it even seems to sink in to diehard Tories, always ready to sell out the commons for private gain, that there might be drawbacks to facing big trading partners on their own. So that would be a tactical advantage for the UK to be able to shelter behind existing EU trade deals and tell its big negotiating partners: “Well, we’d love to do a free-trade deal with you but we’ll face big political difficulties if we get a worse deal than the EU on [insert wish list here]. So could we please start from that? In return we can do a few concessions the EU can’t do but we can”.

Not even a Brexiteer could overlook that, eh?

Posted on 9/5/17 | 8:26 AM CET

tpk

@steuersklave
This article talks about FTAs, but also about “a deal” with EU in the last paragraphs on which all the FTAs will rest as a basis.
“But he claimed there were politicians in Brussels who were prepared to scupper the prospects of a deal to protect the European project”

And he still seems to imply that there should be some magic membership with SM. Same as May has not said clearly to Japan: there will be no membership with SM.

Tories I assume are under big pressure from the great companies, e.g. Japanese, who have their EU headquaters in UK, to stay member in SM. And the same time they are under political pressure to produce something worth being called Brexit.

I don’t think they will be able to square that circle with any deal. To please the Japanese would mean nearly no change. To please the Brexiteers would mean WTA. As soon as you try to go in between you have the cherry problem. Now what to do?

Posted on 9/5/17 | 8:43 AM CET

kermelen

No trade deal before Brexit: Mr Fox or the Art of opening doors that are already opened.

But his belief that the EU is ruled by businesses is even worse. And taking such a prevarication as a strategy to strike a post-Brexit trade deal that would undermine the EU on its principles is just ±!@#.

This will never happen: is Mr Fox plain st@pid or does he seek for a negotiation failure?

Posted on 9/5/17 | 9:01 AM CET

andrea

What a pathetic clown in charge of trade negotiations. Finally he admits that the UK cannot negotiate independent FTDs with other countries but will just copy and paste existing EU ones. But you only copy good stuff so maybe the EU is not so bad after all.
Is copy and paste what Davis,the top clown in the british team , referred to when he talked about being flexible and imaginative?

Posted on 9/5/17 | 9:46 AM CET

Steuersklave

@ Ronald Gruenebaum

‘Another glorious attempt to get what you already have. It’s quite pathetic.’

Not at all. What we already have is a customs union with the EU. The UK is leaving the EU customs union but wants continuity in existing trade agreements after it leaves.

Posted on 9/5/17 | 10:27 AM CET

Steuersklave

@ tpk

‘I don’t think they will be able to square that circle with any deal. To please the Japanese would mean nearly no change. To please the Brexiteers would mean WTA. As soon as you try to go in between you have the cherry problem. Now what to do?’

There are going to be economic winners and losers from Brexit, just as there were winners and losers from Britain entering the EEC in 1973. It seems likely that the UK car industry is going to be a loser, as well as certain other areas of cross-border manufacturing. Single Market membership overall is a net burden for the UK economy, however much investors in Tokyo would wish otherwise, so I can’t see any realistic chance of the UK being permanently in the EEA.

An EU-UK free trade deal would mitigate losses in the UK car industry, but would still probably lead to stagnation in investment for a while. Failing that, normal WTO tariffs would be around 10% for UK car exports into the EU. 10% is rather less than the devaluation in the pound since the Brexit vote, and it is possible that the UK government might operate some tariff compensation scheme (basically funded by the tariffs paid by greater German imports into the UK) as long as these are legal under WTO rules. But it’s hard to see how WTO could be positive for UK-EU manufacturing networks, even if the bureaucracy of tariffs and non-tariff barriers (standardisation, norms, etc.) could be kept to a minimum.

Posted on 9/5/17 | 10:40 AM CET

Chumley Warner

@peter
No I’m not Aadvark breakfast, just a name picked from the fast show I think.

@steuersklave
“It seems likely that the UK car industry is going to be a loser”

I disagree completely. UK exports 14.8 billion euros of cars to EU but imports 44.7 billion euros of cars. I see imports of EU made cars to the UK dropping massively and Japanese manufacturers in the UK doubling or trebling output to meet local demand…they are already talking about increasing output and sourcing more UK components. They see the writing on the wall and will happily build all we can buy.

Most cars on the UK roads seem to be german…do you really think that will stay the same after brexit? EU made cars on the UK roads will become a relatively rarer thing

Posted on 9/5/17 | 11:39 AM CET

Chumley Warner

To add, 10% tariffs on cars? Bring it on. Using the euro figure exports and imports for cars I have posted the UK will pick up 3 billion euros net. That will help Japanese car makers a lot in development “loans” and ahem subsidies

Posted on 9/5/17 | 11:43 AM CET

tpk

@Steuersklave

And I would say Tories, and in some sense the whole of UK, have not decided yet what to go for. You can tell by the papers, they wrote them only recently, they could not just print them out. They are still in the process of getting a full picture and listening to all the news and informations coming in.

That’s why they are not in a hurry in Brussels. As soon as Tories will have made up their mind, negotiations will speed up in a major war.

Posted on 9/5/17 | 12:47 PM CET

tpk

Well, if the copy/paste approach works, UK has eliminated the major thread of standing there completely naked after Brexit. It’s quite a good move, I must admit, especially considering that UK might be better off with these EU FTAs then after new negotiations, as Joducus pointed out. Now it’s a question if the important countries will be buying this. If I was them I would agree but say, let’s just do these one or tow little amendmends. And as UK is in time pressure …

Posted on 9/5/17 | 12:58 PM CET

Steuersklave

@ tpk

‘will speed up in a major war’

I imagine that was a typo. You presumably meant ‘in a major way’ (even though a trade war is perfectly imaginable).

Brussels appears to be in no hurry because it isn’t prepared to negotiate. The EU has spent a year negotiating with itself and the EU27 and the 3 ‘position papers’ is all it has to offer the UK on a take-it-or-leave-it basis. The UK, understandably, is not interested in paying up to 100 billion Euros on ill-defined or non-existent legal grounds, subjecting itself to ECJ jurisdiction for citizens’ rights, or abandoning part of its country to the EU.

It makes more sense for the UK just to bide its time and wait until EU exit is automatic on 29 March 2019.

Posted on 9/5/17 | 12:59 PM CET

wow

And the sky is still blue.

Is it a slow news day where information we have known for 7 months somehow makes Politico headlines today?

Posted on 9/5/17 | 1:12 PM CET

tpk

@Steuersklave
“way” I meant
Well, we seem to look at Brussels with very differently biased glasses at Brussels.
I’d say EU does not need to prepare for the negotiations as the possible solutions are all already in the shelf (EEA, EFTA). The only thing that could be tailor made would be an FTA, but that you can not prepare alone.
And do you actually believe Tories really know exactly what they want in the moment? I mean something they could write down and people who know the mechanis of EU well would not get severe stomach pain?

Posted on 9/5/17 | 1:44 PM CET

Chris Bovey

This is insane, we already have a trade agreement with these countries and they can never be as interesting as the tariff free access to the Single Market, because they are so far away. The right wing loonies are literally going to sink this country on the basis of lies written on the side of a bus.

Posted on 9/5/17 | 3:10 PM CET

fiksi

Fix sprouting complete nonsense… as usual.

UK can’t take over any trade deals, one issue being technical- UK does not have it’s customs, tariffs, institutions etc. yet. UK needs to set up equivalent of EU agencies, define laws, customs and much more.

What this guy is saying is basically, can I take wheels from Hummer an dput them on a bike? You can’t, they don’t fit.

EU should also act decisively to block any such nonsense, as it is hugely ibnfluential in WTO etc.

UK can reopen negotiations, but it’s a fresh deal. New tariffs, new laws, customs etc.

The Brexit fraud continues.

Posted on 9/5/17 | 3:34 PM CET

Steuersklave

@ tpk

But those ‘solutions’ (EEA or EFTA) aren’t solutions at all because the UK doesn’t want them.

Posted on 9/5/17 | 5:21 PM CET

oden schutz

When will the English learn that brexit means brexit? Pay your bill, get out, and know grief. Then we may let you back with your begging bowl, not before.

Posted on 9/5/17 | 6:11 PM CET

Les

@oden schutz

Complete lack of imagination. Find your own meaningless slogan.

Posted on 9/6/17 | 4:06 PM CET

Peter

“Businesses will increasingly make their voices heard. We would all be wise to listen to those,” Fox said
On the continent we have a representative democracy to listen to, it seems to work somehow. Keep the Murdoch c.s. business voices for yourself, they are as usefull as chlorinated chicken.